GBP Traders Eye BoE as UK Inflation Hits 2.9%
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UK inflation accelerated to 2.9% in August, with core and services components holding steady. That combination supports a hold from the Bank of England at tomorrow's meeting, but it does not fully remove the risk of tightening down the line.
For GBP pairs, the key tension lies in diverging signals: wage growth is slowing and the labour market is weakening, yet headline inflation remains above target.
Markets are currently pricing in four rate hikes, a scenario that looks stretched given the underlying labour data. Traders should watch for repricing in GBP/USD and EUR/GBP as the BoE's tone becomes clearer over the coming sessions.